BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1917 (Gordon) - Outpatient prescription drugs: cost sharing.
Amended: June 24, 2014 Policy Vote: Health 6-2
Urgency: No Mandate: Yes
Hearing Date: August 4, 2014
Consultant: Brendan McCarthy
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 1917 would limit cost sharing for a 30-day
supply of a prescription drug to 1/12 of the annual
out-of-pocket maximum for a prescription that has a course of
treatment more than three months or 1/2 of the annual
out-of-pocket limit for a prescription with a course of
treatment of less than three months.
Fiscal Impact:
Costs of $35,000 in 2014-15, $78,000 in 2015-16, and
$70,000 per year thereafter for review of plan filings and
enforcement by the Department of Insurance (Insurance Fund.)
One-time costs of $80,000 for adoption of regulations and
review of plan filings and ongoing costs of $25,000 per year
for enforcement by the Department of Managed Health Care
(Managed Care Fund).
No significant impact to CalPERS for health care costs is
anticipated. The California Health Benefits Review program
analyzed a previous version of this bill and concluded that
health care costs to CalPERS would increase by $5.6 million
per year. However, the increase in costs to CalPERS in that
analysis related to reduced cost sharing for infertility
drugs. As is further explained below, the current version of
this bill would not reduce cost sharing for infertility
drugs. For prescription drug coverage that would be impacted
by this bill, CalPERS health plans use a co-payment system
that complies with the requirements of this bill.
Background: Under current law, health insurers are regulated by
the Department of Insurance and health plans are regulated by
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the Department of Managed Health Care (collectively referred to
as "carriers).
The federal Affordable Care Act and implementing legislation
enacted in California make a variety of changes to the
individual and group health insurance market. Changes to the
market include a requirement for "guaranteed issue" of coverage
if premiums are paid, a prohibition on denials of coverage for
preexisting conditions, and many other regulatory requirements.
Beginning on January 1, 2015 in the individual market and small
group market, the amount of out-of-pocket expenditures made by
enrollees due to copayments, coinsurance, or deductibles for
covered essential health benefits will be limited. State law
will limit out-of-pocket expenditures to the limits allowed
under federal law (for 2014, those limits are $6,350 for an
individual and $12,700 for a family).
Proposed Law: AB 1917 would limit cost sharing for a 30-day
supply of a prescription drug to 1/12 of the annual
out-of-pocket maximum for a prescription that has a course of
treatment more than three months or 1/2 of the annual
out-of-pocket limit for a prescription with a course of
treatment of less than three months.
The cost-sharing reductions in the bill would only apply to a
high-deductible plan once the annual deductible is met.
The cost-sharing limits in the bill would only apply to
prescription drug coverage that constitutes essential health
benefits.
The changes in the bill would go into effect on January 1, 2015
in the group market and January 1, 2016 in the individual
market.
Related Legislation:
SB 1176 (Steinberg) would require carriers to track
cost-sharing expenditures by enrollees and make carriers
responsible for notifying enrollees when out-of-pocket
maximums have been reached. That bill is pending in the
Assembly Appropriations Committee.
AB 2418 (Bonilla) would require carriers to allow enrollees
to opt out of mandatory use of mail order pharmacies, allow
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synchronization of prescriptions, and permit the early
refilling of ophthalmic medications. That bill will be heard
in this committee.
Staff Comments: Under current law, non-grandfathered health
plans and health insurers are required to provide coverage for
essential health benefits, as defined in federal and state law.
In addition, the state has selected the Kaiser Small Group HMO
as the state's essential health benefit benchmark plan.
Therefore, all non-grandfathered plans are required to provide
the same level of benefits as are covered in the benchmark plan.
The Kaiser Small Group HMO does not provide coverage for
infertility drugs. AB 1917 was amended in the Assembly to limit
the cost-sharing reductions to prescription drugs that are
required as essential health benefits. Thus, infertility drugs
are not subject to the cost-sharing reductions in this bill.
The California Health Benefits Review Program has not completed
a new fiscal analysis of the bill to reflect the limitation on
cost-sharing to essential health benefits. However the Program
has indicated that the cost increase previously projected for
CalPERS was due to infertility drugs.
The only costs that may be incurred by a local agency under the
bill relate to crimes and infractions. Under the California
Constitution, such costs are not reimbursable by the state.